236: Trusts & Legacy: Why South Dakota Leads in Planning
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What if your wealth could be preserved for generations, without family conflict, excessive taxes, or probate headaches? In this episode of The Richer Geek, we’re joined by Antony Joffe, Chairman of Sterling Trustees, to break down the world of trusts. From South Dakota’s unique laws to protecting your family legacy, Antony shares insights every entrepreneur, professional, and future planner should know.
In this episode, we chat about…
Antony’s career journey from CPA and investment banker to building Sterling Trustees with his father.
Why family trustees often create conflict (and legal risk) and how corporate trustees solve that problem.
How South Dakota became the trust capital of America and what makes its laws stand out.
Real-world protections trusts can offer against creditors, lawsuits, divorce, and even poor financial decisions.
The role of technology and the future of trusts, from AI-drafted documents to blockchain accounting.
Why entrepreneurs, especially in high-tax states like California, should consider trusts early in wealth planning.
Key Takeaways:
Trusts aren’t just for billionaires. Even middle-class families can use them to preserve wealth and reduce probate costs.
South Dakota leads the nation in progressive trust laws, offering tax advantages, asset protection, and strong privacy features.
Corporate trustees provide expertise and neutrality, preventing family disputes and ensuring compliance with fiduciary duties.
Trusts can be customized for flexibility, from staggered payouts to charitable giving, while safeguarding against divorces or creditors.
Tech is reshaping trust management, with AI simplifying documents and blockchain promising long-term transparency.
Start planning earlier than you think. Even in your 30s or 40s, a trust can protect future business exits, stock options, or inherited assets.
Resources from Antony
LinkedIn | sterlingtrustees.com | Tax Savings Calculator | Contact Antony: 610-314-8590
Resources from Mike and Nichole
+ Read the transcript
Mike: Hey everybody. Welcome back to another episode of The Richer Geek Podcast. It's my pleasure to introduce Antony Joffe. He's Chairman of Sterling Trustees LLC, a South Dakota Chartered independent corporate trustee, providing trust administration services to clients around the world. Sterling's well known for his independence and unparalleled service combined with a fixed fee compensation model instead of asset under management fees. We all like that. This barrier to outside influence or conflict of interest enables Sterling to remain focused on the goal of administering trust in accordance with the grantor's wishes, which is you and I, and the needs of beneficiaries. How are you doing, Antony?
Antony: Great. Thanks for having me on.
Mike: You know, I'd like to start the podcast out with a little bit of a background. Who is Antony?
Antony: So I started Sterling Trustees about 17 years ago. My dad and I started so family-owned business. Prior to that, I guess I was a CPA by training, did my two years of indenture curvature with one of the big six accounting firms, 15 years in investment banking. And my dad was a practicing trust and estates attorney and had really developed a practice around helping families that needed an independent corporate trustee. And, you know, he sort of served in that capacity as an individual and over his career built up to a point where he had about $800 million of assets that he was personally responsible for. Started thinking about succession planning and what happens if he got hit by the proverbial bus, wanted to make sure his clients were taken care of. And decided to create a corporate trust company and move all the assets out of his name, into this entity. And he went ahead and did that quickly, realized he couldn't run his legal practice and run the trust company with all the regulatory and fiduciary risks that came along with it. And that's when it created the opportunity for me. So he called me at the end of seven as the market was gonna hell in a hand basket. Seemed like a good time to get outta the investment banking world into a more recurring revenue business. And you know I joined him 17 years later.
Mike: That was very nice of him. Just like, "Hey, you know, now's a good time for you to have more stress than me to have less."
Antony: That's right. Timing is everything.
Mike: Timing is everything. For those that don't know, maybe they're just starting out and they're just out of college. What is a trust?
Antony: Yeah, so a trust is, I think of it as a vehicle to be able to transfer wealth to another generation. Typically most people think of a will and a will basically sets out that, " On my death I'm gonna give x, Y, Z dollars to my wife, maybe something to my kids, and so forth." And, you know, they get that money outright. But a lot of families that have created maybe some wealth or they have kids that, you know, they don't think are fiscally responsible, think that a trust is a better vehicle to do that in. And so all the money would go into a trust. You would have a trustee that's typically an independent person that would manage the assets in the trust and then they would make all the decisions regarding what distributions they would make to the beneficiaries or the heirs of the family to receive that money. There's lots of different combinations of different types of trust to serve different types of purposes, but you know, for all intents and purposes, that's sort of the basic estate planning purpose of a trust.
Mike: Yeah. It is kinda like the start and you still have maybe a brother or sister or someone in the family that kind of runs it, but then, you know, they're factory workers, they're whatever. It's like they don't know all this documentation and that's the importance of having someone like you, right? They can go alongside and say, "Okay, this is what all this means."
Antony: Yeah. I think a lot of people, you know, a parent asks you to be the trustee of their trust or whatever. They think it's a great honor and privilege, but most of 'em don't realize the sort of fiduciary risk that they're taking on in terms of, you know, you need to have legal knowledge, you need to have investment knowledge, accounting knowledge, tax knowledge. And most of them don't have that. They may have a little bit of investment knowledge, and so when something goes off the rails, they're gonna land up in hot water, likely they'll get sued by the beneficiaries. Most of them don't have errors in emissions insurance to cover any losses. And so they typically are gonna dig into their pockets, and so it could really become a nightmare. The other thing you see is, you know, they'll name the oldest brother or sister as the trustee. And now, younger brother, younger sisters have to go to older brothers to get a distribution and you can imagine the issues that potentially causes within the family. And so we as an independent corporate trustee, don't have any acts to grind and could preserve that family strife. And we bring all that knowledge and expertise to the table to manage that regulatory and fiduciary risk.
Mike: And it's also important, you know, we were talking about if you have children, if you don't have children, what still goes into maybe charities or it goes to nieces and nephews? It goes to different things. You don't have to, people say, "Well, I don't have any children. I don't need one of these."
Antony: That's exactly right. I mean, it could go to aunts, uncles, nieces, nephews, charities, maybe alma mater. There's lots of possibilities and you know, depending on the size of the wealth that you've created, you could have multiple, multiple charities. It really depends how you want to go out and, you know, a trust gives you that flexibility to be able to manage that, you can't really sort of rule from the grave, but at least your wishes will continue on past death and whatnot and hopefully you can do some good.
Mike: Now, is it in the trust or is in a will where you say, and I think it's a good idea if you are giving it to nieces and nephews, let's just say, I don't want them to have it until you can do stipulations within the trust or is that within the will?
Antony: No, in a trust too. I mean, trust typically you can have, kids are entitled to get the principal or the income of the trust on an annual basis. And then at age 35, they could get one third of the principal of the trust and at age 55 you can get another percentage or whatever. So you see that a lot, there is danger in that, if it's a big trust, you're getting a lot of money that could get blown and obviously could lead the beneficiary into a lot of issues. The other thing is, you don't know who your kids are gonna marry. And let's just say you make a distribution at age 35 of a couple million bucks, and the next day you decide to get divorced, that money could disappear. So sometimes that is good and sometimes it's bad. We think it's better to keep the money in the trust. Leave it at the trustee's discretion as to when to distribute so that you don't get yourself into a situation where you find yourself in a divorce and that money disappears, or we make that distribution and you've got creditors coming after you. Now all of a sudden that money is available to them to get, and that's the other thing that trust can really help protect assets against.
Mike: So what you're saying is that if you put it in the trust, and let's just say that I give an annual salary, you know, it was just a distribution. Would you have to do, like a prenup or it's like, how do you protect that annual salary? Because a lot of people are thinking, it's like, "Oh, yeah, yeah. I never thought about it if my child got a divorce." How do you protect it from the ex?
Antony: Yeah. So, you really just make the trust discretionary. So instead of paying out an annual. The annual income of the trust or whatnot. The beneficiary just needs to go to the trustee and ask for a certain amount and distribute that what's needed versus making lump sums that potentially land up in an ex-spouse's hands or in a creditor's hands. If you get yourself into a pickle, you know what it's IRS or I don't know. A tree falls in your house and kills somebody. I mean, you know, you think of all the dangerous things that could go wrong where maybe insurance coverage doesn't protect you.
Mike: That's good. Now we'll get into what you do as far as the South Dakota Trust and you're saying it is the trust capital of America. Why is that and what's so great about a South Dakota Trust?
Antony: Yeah. Every state has its own trust laws, and those laws sort of vary by state. South Dakota today really has the most progressive trust laws out there. So some of the features that are really useful for our clients is a, there's no state income tax or capital gains tax. Any income or capital gains that grows in the trust, you only pay tax at the federal level. You don't pay any state income tax or capital gains tax, so you really can start to compound your money much quicker. So, you know, California for example, where you're paying a 13% income tax or capital gains tax if you're paying that on your trust income every year. It takes a huge bite out of it. And so for South Dakota purposes, you could defer that. Secondly, they have a, what's called a no rule against perpetuities, meaning that you can have a trust that goes on forever. So for some very wealthy families, that's a great way to sort of perpetuate your wealth for multiple, multiple generations. They have great asset protection. So once assets sit in trust for two years, they really become bulletproof for creditors. A fishery can't be forced to take, get a distribution out of a trust to pay a credit, for example. So great asset protection. The other thing they have with great privacy laws, and there's sort of two pieces to that. One is at the age of 18, most states you have to notify the beneficiary of the existence of the trust, and they're entitled to get statements. So you can imagine, an 18-year-old kid going to college finds out they're the beneficiary of a million, $5 million, $10 million trust, sort of great way to sort of stifle their ambition and whatnot. So South Dakota is silent. You don't have to notify the beneficiary and you can say, you can put language in the trust document that says, you know, I don't want the kid finding out about the trust until they're age 40 and functioning members of society. So that any income they're getting from the trust, it just becomes sort of a security blanket versus something they get addicted to and want to live off of every year. The last piece of privacy really is if the trust is ever made part of a lawsuit. You can have the trust permanently sealed in South Dakota, so it'll never see the light of day. And where this becomes useful is, going back to that. A kid getting divorced, maybe they've enjoyed the benefits of the distributions that their spouse got, but now they're out of the family and they want money. And so they want to get at the trust document and at the trust accounts and whatnot. And in South Dakota, you can shut that down and have it permanently sealed and whatnot. Again, for wealthy families, that's a great way to protect their kids long term.
Mike: From experience, when last time I bought a hotel, the bank wanted to know everything. You know, personal financial statements, but I had to tell them I had to trust. Same in South Dakota or you? I don't have to.
Antony: Yeah. You still need to disclose that stuff. But if it was made part of a lawsuit, a different situation.
Mike: It locks.
Antony: Yep. Yeah.
Mike: Yeah. That's interesting 'cause I know in some states, and you know, this could be the people in your business or the attorneys. They're saying, well, a trust isn't maybe and is different from the South Dakota Trust, but they're saying, you know what? You need an FLP or something. You need something else that'll lock it, more so, or a bridge trust or, you know, these different things that it, the trust all of a sudden jumps to in case there's something.
Antony: You can do that sort of stuff. I mean, if you go to a trust in a state attorney and I don't know, just name a state, let's say Arkansas for example. Most Arkansas attorneys will know Arkansas law and you tell 'em, well, I want to move a trust. I wanna create my trust in South Dakota. And you know, a lot of 'em just aren't familiar with the South Dakota laws. And so, you know, they'll sort of poo poo it and say, well you can do this in Arkansas, and then maybe they're putting an LLC underneath the trust to add a layer of protection and whatnot. When you can go directly to South Dakota and not have to deal with these fancy structures underneath. And by getting it outta state, you add another sort of layer of protection in terms of asset protection and whatnot. So, if you've got a creditor in Pennsylvania, they've got, or in Arkansas, you've gotta go to South Dakota to get in front of a judge to, to get paid versus, it's a lot easier if you're in Arkansas to do that. So a lot of it is just knowing what you can and can't do. Sometimes what you're gonna find is the attorneys just aren't knowledgeable and that's where it sort of just pays to sort of knock on multiple doors. Don't just take the first answer and whatnot. The benefit of this is you know, you don't have to live in that state to be able to take care, take advantage of their trust laws. South Dakota's got very progressive trust laws. Delaware, Alaska, Nevada, Tennessee, New Hampshire are really sort of the top tier states. But you know, today South Dakota is sort of the biggest one out there, believe it or not.
Mike: That's nice. As we all know, those attorneys that are gonna sue you, they want the low-hanging fruit. And all of a sudden they're like, "Oh, I gotta go there and I gotta do this. And I don't know anything about it." They're just most likely gonna blow it off. Right? Or not take it.
Antony: Yeah, no, it's exactly right. I think, and then it potentially just becomes a negotiation. So instead of having to pay a hundred cents on the dollar, maybe you're only paying 10 cents on the dollar. It just puts you in a much better negotiating position if there is liability or whatnot. So people should take advantage of it. Don't be put up by what an attorney might say to you. You can take advantage of any trust state's law if you wanna set up a new trust. Mike: That's very important. So what we're getting into is the age of tech, the age of AI, it used to be, I'm just gonna sit down, you send me 45 pages. It is something I fill in the blanks, and I want cremated or I want this, I do this. How's tech playing a role nowadays in trust?
Antony: You know, good question. The drafting of trust I think is probably becoming a little more automated with AI and that kind of stuff. You can get stuff done quicker, better, cheaper. You still need to know that your trust, the state attorney, knows what they're doing. 'Cause I think you can get some attorneys sort of just addicted to the forms and you know, as you said, they're just filling in names, charge you a fixed fee and they're on to the next client. But they couldn't tell you what exactly was in that, in that form that they created. But, I think that's probably one area. I think the other area that's probably a little bit off, but I could see sort of the blockchain being used for accounting for trust, you know, 'cause obviously trust could go on for multiple, multiple generations. And you need a set history of transactions and history and whatnot. And that's where I think the blockchain could be really, really useful going forward. And so I think, in the future here, sort of trust accounting platforms will be built on the blockchain. We'll see whether or not that comes to fruition here in the next five, 10 years.
Mike: That was gonna be my next question. You know, trust has been around for forever. We've seen different trusts, I don't know if these attorneys say, "Hey, you know, you need this, this," and then all of a sudden you have five different trusts. Where do you see it in five years? Are you going to see this evolution of maybe away from perpetual trust to something new? What do you see in the next five or 10 years in the evolution of trust?
Antony: I don't know if there'll be much of an evolution other than, maybe an arms race as to what other features and functions you could add to a trust. A lot of states just haven't updated their trust laws in many, many years and as a result, a lot of assets have flowed out of states into more progressive trust states like South Dakota. So I think states will probably wanna stop that flow. Either updating their laws or whether or not, you know you have to pay tax. In the home state that you're in, even though you've created a South Dakota trust, you know, I think there might be some potential clawbacks there that they might wanna look at because they're potentially losing out revenue. I mean, California, for example, is trying to get their claw into everything. We'll see where that goes. I mean, the Supreme Court, there's been a couple of cases over the last, I guess five years that sort of shut that down. But we'll see how that goes in the future.
Mike: Yeah. California's getting desperate. It's like if you move outta California, you still have to pay. They're thinking about exit taxes now, you know?
Antony: That's exactly right. So I can see sort of maybe that coming to pass here, especially, you know, high tax states where people are moving out quickly and they're losing tax base and whatnot. That might be a way to sort of hang out.
Mike: Yeah. Very interesting. So Anthony, and everybody, it's Sterling Trustees. What educational materials, what are they gonna find on your website?
Antony: Yeah, you'll find a ton of information on our website. A lot of information on different types of trusts and how they work. We've done a lot of, also a lot of white papers on comparing different trust states and their trust laws, so you can see what the differences are and whatnot. We actually also have a very useful feature, we call it a tax calculator, where basically you can put in the amount you're gonna deposit into the trust, and you can see how it would grow in South Dakota versus say, a high tax state of California or New York or Connecticut. So you can see the growth of those assets so that if you do go to a trust in the state attorney in California or New York and they tell you, you can't do this, and you know it's not worth it. You can give 'em the graph, show 'em the millions of dollars you're gonna accumulate using South Dakota versus California or New York Trust, for example.
Mike: Yeah. You know everybody, I know a lot of you're living in California and you're sitting there, it's like, "Yeah, you know what? Maybe I should look at this South Dakota Trust." 'Cause a lot of our listeners are California, Washington, they're tech-based type of people.
Antony: Trust could be really useful, particularly for California and Washington tech entrepreneurs where you're potentially getting options or low basis stock in companies. Get it outta your name and into a trust 'cause if those things explode in value, you've got a $13 million lifetime gift exemption, you get above that amount. Now you're in an estate tax, you've got an estate tax problem, you can move it out into a trust and protect it and get it outta your estate and save that 40% estate tax. So there's a lot of planning you could do there to, you know, really save yourself long term there.
Mike: Antony, I always like to end, is there anything that I've missed, something else that you'd like to inform our listeners that maybe I didn't hit on?
Antony: No, I think we hit on a lot of it, I mean, it's never too early to start planning. Particularly, when you're in your thirties and forties, you might start having kids and you go get a will drafted and you may be thinking about creating a trust. Typically at that time, you know, you name your friend as a trustee and your trust, he's usually the same age as you. So when you die, they're likely gonna be dying around the same time if they, you know, long for life. People don't think about those things and that's really where a corporate trustee can be really useful to make sure there is that continuity going forward. As we just touched upon, are you going through an exit opportunity from the sale of a business or getting stock options in a venture backed company that's, you know, going to the moon and how do you protect those assets in a high tax state? Those are things that even in your twenties and thirties, you should start thinking about.
Mike: Yeah. 'cause you know, a lot of people, it's like, "Well, I don't make enough money to have a trust or a will and things like that." You know, that's kind of illogical. Right?
Antony: Absolutely. I mean, listen, you might take an auto worker that's worked really hard and, you know, sort of that million millionaire next door and managed to sock away a couple million dollars during their lifetime and maybe has three kids that maybe aren't that sophisticated, don't know how to deal with money and having been as thrifty as they've been. And he wants to make sure that money not only lasts for his kids, but maybe could pay for college costs for his grandkids and whatnot. And that's where a trust, even if it has a million dollars in it, has a useful purpose, to ensure that legacy continues and that money doesn't get blown right away on death.
Mike: Yeah. And ladies and gentlemen, it's very important and you have probate, you have all these different things that people don't realize. Like you don't want the courts to determine whether or not your heirs get your money or not.
Antony: That's true. You know, when you die, I mean there's really sort of two ways you can get assets to your kids. Obviously one is through a will and you've obviously got probate costs there, but you can also set up a revocable trust today where you can put all your assets into that, get it titled and so forth, so that when you die, you don't even have to go through probate. The trust now becomes an irrevocable trust and life carries on and you can save a lot of costs and headaches going forward as well. So that's another good use of a trust, long term.
Mike: Yeah. Well, Anthony, it's been a pleasure. Thank you for coming on The Richer Geek Podcast. Everybody, go to the website and talk to Antony. How can people get a hold of you?
Antony: Yeah, go to our website, which is www.sterlingtrustees.com. Again, www.sterlingtrustees.com. Well, feel free to reach out to me directly. I'm reachable at 610-314-8590. Again, 610-314-8590. Happy to have a conversation and try to educate you on this. It's not an easy topic, but it's an important topic. And we're there to help.
Mike: All right, Antony, thank you so much for coming on The Richer Geek Podcast. Have a great night.
Antony: Thanks. Thanks for having me.
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ABOUT ANTONY JOFFE
Antony Joffe is the Chairman of Sterling Trustees LLC, overseeing independent, conflict-free trust administration with over $10 billion in assets. With 15+ years in the trust industry, he also co-founded WealthHub, helped establish the South Dakota Trust Association, and has a background in investment banking and auditing. Antony holds an MBA in finance from Temple University and a bachelor’s in accounting from Emory University.